Scaling up supply chain finance in Vietnam

Phase 1 of the Supply Chain Finance Program, which was implemented by the IFC from 2019 to 2024, had achieved positive results in improving the competitiveness and the access to finance of micro, small, and medium enterprises (MSMEs) within the supply chains. Building on those achievements, the IFC and SECO would continue to implement the second phase of the Supply Chain Finance Program from 2025 to 2030.

This program would further support Vietnam to promote the supply chain finance market, focusing on assisting the regulatory agencies such as the SBV, the Ministry of Justice, the Supreme People's Court, and other relevant agencies. Additionally, it would strengthen the capacity on supply chain financing for banks, providers of platforms for supply chain finance transactions, businesses, suppliers, and other stakeholders. The program also aims to foster the development of the financing for green supply chains to enhance the competitiveness of the domestic SMEs.

Trade finance and supply chain finance through the credit institutions’ system are considered effective mechanisms for helping small and medium exporters to gain timely access to short-term working capital. This financing model can also improve the competitiveness, maximize the benefits, and enable the credit institutions to better manage their cash flows and expand credit for the supply chain participants.

In several countries, supply chain finance is recognized as an effective form of short-term working capital financing, allowing MSMEs to access funds quickly while mitigating risks. However, in Vietnam, supply chain finance still faces several challenges, nonetheless, many commercial banks have shown increasing interest in and have been actively implementing supply chain finance programs and products.

Signing Ceremony of the Cooperation Agreement between the IFC and SECO (Photo: Hoang Giap)

On behalf of the SBV’s leadership, Deputy Governor Nguyen Ngoc Canh attended the Signing Ceremony of the Cooperation Agreement on Scaling up supply chain finance in Vietnam between the IFC and SECO. On this occasion, the SBV Deputy Governor expressed his thanks to the IFC and SECO for their effective consultancy to the Ministries and agencies of Vietnam on the policy solutions related to supply chain finance (SCF).

In his remarks, the SBV Deputy Governor stated: "The SBV will continue to coordinate with the IFC and SECO to review and amend the regulations to create a more favorable environment for supply chain finance. This includes revising the regulations on lending through the digital financing platforms and encouraging the credit institutions to diversify their financial products to enhance the access to credit of SMEs. Additionally, we hope that the IFC and SECO will continue to work closely with the SBV to mobilize resources and implement practical, feasible initiatives to further develop Vietnam’s supply chain finance market in the coming years."

Overview of the Signing Ceremony (Photo: Hoang Giap)

At the event, Mr. Thomas Gass, Swiss Ambassador in Vietnam, stated: "The Supply Chain Finance Program has highly ambitious goals: its aim is to bring transformative benefits to the country by providing Vietnamese companies, especially SMEs, with access to working capital. The regulations will continue to be amended in order to create a favorable environment for supply chain finance services. Commercial banks and non-bank financial institutions will have the ability to design the services that meet the specific needs of companies across various industries and sizes. By providing financial support to these businesses, we are not only helping them grow but also contributing to the national goal of becoming a high-income country by 2045, creating decent jobs and strengthening sustainable supply chains."

"Trade is a key driver of Vietnam’s economy and plays a central role in the country’s ambition to achieve high-income status by 2045. The IFC is delighted to collaborate with SECO and our banking partners to help stimulate the supply chain finance market, which will become an important part of the financial ecosystem for SMEs," said Mr. Thomas Jacobs, IFC Country Manager for Vietnam, Cambodia, and Lao PDR.

The second phase of the Program will thus reinforce Vietnam’s efforts to improve SME financial integration into the supply chains, enhancing both their competitiveness and their access to finance.

HM